Peter Funt: TV’​s New Deal May Have Struck Pay Dirt

In the late 1970s and early ’​80s, as cable television evolved explosively from being a tool for improved reception to a vehicle for new program services, I worked as marketing manager for a midsized MSO (multiple-system operator), tasked with convincing people to do something new — pay to watch TV.

The pitch was simple: In return for a monthly fee, we’ll give you a lot of channels. Potential customers, most of whom were making do with rabbit ears, were used to getting three, four, maybe five broadcast channels over the air. So we sold them on volume — 24 channels, 48 channels and, in our deluxe premium package, 65 channels!

When I wasn’t touting channel count, I focused on genres, not shows. I wrote slick brochures and catchy newspaper ads that brought in tens of thousands of new customers without ever mentioning a single television program by name.

You’ll have one channel just for sports, I promised, and another devoted to news. Your kids will have their very own channel, and you can tune to a weather channel whenever you want.

Watching TV back then was like buying in bulk at Costco. It’s not that there weren’t smatterings of excellent original shows on cable — HBO and SHOWTIME were breaking new ground with some of that — but the key to cable’s growth was volume.

The mindset among viewers began with the nightly notion, “Let’s watch television,” and selecting a specific program was somewhat of an after-thought.

This back story is useful in understanding the tumult in TV today. Headlines focus on “cord cutting” and massive layoffs at places such as ESPN, resulting from remarkable growth in digital delivery systems that allow consumers to pick and choose among channels.

That’s all true, but somewhat removed from two critical points. First, the key to selling TV today lies in individual programs, not channels. And second, the effect of this, over time, will be that many cord-cutting consumers wind up paying more for their monthly viewing, not less.

In today’s video marketplace, a single hit show can almost support an entire programming outlet.

A joint venture of four legacy TV suppliers, Hulu has a sizable library of programs and significant original fare beyond The Handmaid’s Tale. Yet, some consumers will, if that’s all they’re after, be paying $8 per month (or $13 for a commercial-free version) to view this one highly acclaimed show.

Netflix, the granddaddy of streaming services, experienced a similar must-subscribe surge in 2013, with the political drama House of Cards, starring Kevin Spacey. No matter how many channels you have access to, the only way to watch House of Cards is by paying Netflix $8 a month.

For me, the most profound example of TV’s new programming focus is with the streaming service known as CBS All-Access. The service offers a feed of CBS’ broadcast network, plus access to its library, all of which meant little to me until CBS added a spinoff of the award-winning legal drama, The Good Wife.

The new series, The Good Fight, which carries over several cast members including the marvelous Christine Baranski, doesn’t quite measure up to the original but it comes close — close enough, for me, to justify a $6 monthly subscription.

There are numerous other examples of must-pay hits, including, for instance, several on Amazon Prime. The over-arching point is this: whatever a bundle of cable channels might cost you, the tab is likely to be even higher if you wind up paying $6 or more for a month’s worth of episodes of a single show.

And, you’ll still want the conventional broadcast networks along with a package of cable-based channels such as ESPN, CNN and AMC. That’s why Hulu just launched a $40 version of its service that streams many of those very channels.

On the business side, all this activity is likely to shift the dollars around without fundamentally affecting industry totals.

On the programming side, however, television is again being reminded that content is king; moreover, quality trumps quantity. That’s something that newspaper and magazine publishers should think about before slashing too many more newsroom jobs.

One of my selling lines back in the early days of cable marketing was, “Television worth paying for.” Four decades ago, that was, at best, a semi-truth. Today, it’s axiomatic.

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